It turns out the checks will still be showing up in the mail after all.

The U.S. Treasury, which said it would no longer be sending Social Security, Veterans Affairs, Railroad Retirement and other government benefits by paper check as of March 1, has reversed course, but in a quiet sort of way. The 5 million recipients who are still receiving paper checks can continue to receive paper checks and won't be forced to choose between direct deposit or a prepaid debit card. At least not for now.

The department still plans to do what it can to persuade holdouts to move to the electronic age. But until then, the paper checks will keep coming.

The Treasury Department had announced its plan to make all check recipients receive their funds electronically. But it turns out that a sizable portion of the population doesn't have a banking relationship. And the debit-card option includes a variety of fees for ATM withdrawals, mailed account balances and foreign currency fees.

"We are going to work with noncompliant check recipients to convert them to what electronic method works best for them," said Walt Henderson, director of the Go Direct campaign for the U.S. Treasury in Washington, D.C. "We have made the choice to not automatically shift someone away from checks - especially those who have unique circumstances or are in vulnerable populations."

A perplexing tactic

Some folks criticize that as a confusing and ill-conceived approach.

"They've been telling people for months they have to take action," said John Runyan, executive director of Consumers for Paper Options.

"My guess is that they will continue to publicly tell people about the deadline of March 1 while winking and nodding to Congress that they won't force anyone," said Runyan. "It just doesn't seem right."

Runyan's Washington group is supported by the Envelope Manufacturers Association, a group with a vested interest in continuing the tradition of paper checks. The group advocates that recipients of federal benefits, also including the Supplemental Security Income program and federal employee-pension plans, should be able to decide the form in which they want to receive the benefits.

The government expects to save $1 billion over the next 10 years by shifting to electronic funds distribution. The Treasury Department hired a public relations firm to spread the word and sent out breathless news releases like one earlier this month titled, "Time Is Running Out for Senior Citizens and Other Federal Benefit Recipients to Meet March 1 Electronic Payment Deadline."

A conflicting message

David Fowler, president of the Texas chapter of the Paralyzed Veterans of America, said he worries the inconsistent message will confuse veterans.

Veterans won't know if they really have to make the switch, said Fowler, whose office is in Houston. He said he hates to see the government limit the payment options for some veterans who don't have a checking account or don't want to pay the fees the debit card charges.

"It's downright gouging," Fowler said, referring to the fees of 90 cents for ATM withdrawals, 75 cents per month for mailed paper statements and $1.50 per transaction for bank transfers. Those who live overseas would face a 3 percent U.S. currency conversion fee plus a $3 ATM fee, according to the Social Security website.